Policy for Engineering Service

Contributions (ESC) for Roads and

Stormwater

and

Methodology for the Calculation of

Engineering Service Contributions for

Road and Storm-Water Infrastructure

City of Johannesburg

(30 January 2014)

ESC Roads Policy

1. Introduction

The City of Johannesburg’s Policy for Engineering Service Contributions for Roads and

Stormwater as approved by Council on 30 January 2014 item 20, as set out in this

document. This new policy replaces the formula for levying a Bulk Services Contribution

previously developed in accordance with the Administrators Guidelines, Town Planning and

Township Ordinance 1986.

The policy deals with financial or equivalent contributions that must be made by applicants

(developers) who are granted enhanced land use rights. This Engineering Service

Contributions (ESC) is required to fund the “external” infrastructure that is necessary for the

municipality to provide to mitigate the increased load on municipal services as a result of the

proposed development. The contributions are also known as bulk service contributions, or

payments for the provision of engineering services.

The policy was based on a November 2008 Policy for Engineering Service Contributions

for Roads and Stormwater report considered by the Mayoral Committee on 2011/07/21. It

includes amendments made in response to public comment received from August to October

2011. It has also been updated to bring it in line with the South African Engineering

Service Contribution Manual for Municipal Road Infrastructure, COTO TMH15,

September 2012.

This policy deals with theprinciples, legality, determination, application, utilization and

updating of ESC. A separate document, ESC Roads and Stormwater Implementation

Manual, is availablewhich explains how to calculate the contribution due.

2. Description of Terms

2.1. Applicant, in legislation, is the person making the application for a change in land

use rights. The applicant is often referred to as the developer and the two words are

used interchangeably in this policy.

2.2. Engineering Services determined in legislation are water, sewerage, electricity,

roads and stormwater drainage. This policy applies only to the calculation and

application of engineering service contributions for the latter two, i.e. roads and

stormwater.

2.3. Engineering service contributions are financial or equivalent contributions made

by the developer towards the capital and related cost of the City of Johannesburg of

providing external services.

2.4. External Engineering Services are the responsibility of the City. They include

services outside the borders of the development, Class 1, 2 and 3 arterial roads which

pass through the development, and any widening or upgrading of an internal service

required by the City over and above the minimum needed to serve the development.

2.5. Internal Engineering Services are the responsibility of the developer. These

services are required for the “exclusive” use of the development, e.g. the Class 4, 5 and

6 “access” streets serving erven within the development. Internal services are usually

handed over to the municipality (free of charge) when the development is completedand

therefore must be provided to municipal standards. However, any requirement to provide

land or services over and above the minimum needed for the development is considered

external.

2.6. Master plan indicates the development framework and the mobility road network

required to serve the region or area.

2.7. Road Services that are provided by the contribution include any or all of the

following:

Construction related costs, e.g. site establishment and traffic accommodation

Earthworks

Grade separation

Guardrails and safety devices

Kerbs

Land (road reserve or servitude)

Landscaping

New pavement (roadway)

Non-Motorized Transport facilities such as paved sidewalks and bicycle lanes

On-street public transport facilities

Professional fees, including environmental assessments

Preparation of a transportation master plan for the affected area.

Stormwater drainage within the road reserve

Street lighting

Strengthening of pavement (roadway)

Traffic signals, signs and markings

2.8. Stormwater Services that need to be funded include any or all of the following:

Land (servitudes) for bulk stormwater

Pipes, drains, culverts, canals and related structures.

3. Scope

This policy applies to the calculation and application of engineering services contributions for

roads and stormwater.The policy applies in all instances where enhanced land rights are

granted, including when the City of Johannesburg oranother government authority is itself

the developer.

The policy excludes the cost of:

(a) roads that are owned by national and provincial spheres of government;

(b) maintenance and operations; and

(c) off-street public transport facilities.

4. Policy Principles

The policy complies with all legal, financial and administrative requirements of the Council.

It is based on the following principles:

Justified. The approval of enhanced land use rights, whether new townships or

rezonings, will result in the requirement for new or upgraded infrastructure, and/or

create an additional load on existing infrastructure and services. It is therefore

justified that the beneficiary of the enhanced rights contributes towards the capital

cost of those services used. This additional load will be determinedon the basis that

existing communities should not have to subsidize new townships by allowing free

use of previously provided services.

Limited. The contribution a developer should make is limited to the expected impact

on the infrastructure and services. The developer is not asked to contribute to

backlog or to provide services in excess of the impact the land use change will have,

hence the new township does not have to subsidize existing communities.

Full Cost Recovery. In line with the above two principles, the policy is based on full

cost recovery. The impact of the additional demand is calculated, and the full cost of

supply to meet the demand is the contribution thus required.

Consistent. The application of the policy is uniform and standardized throughout the

City of Johannesburg and has been aligned with National Standards

Equity. All developers are treated equally. The impact is determined based on a

fixed set of factors which are predetermined and set for each particular land use and

size.

Certainty. Applicants know beforehand what the ESC will be and can build that cost

into their viability calculations before making the application.

Defendable. The policy is based on sound engineering principles, has been the

subject of extensive research and consultation, is valid in law, is aligned with national

standards and is therefore defendable.

Efficiency.The policy is transparent, easily checked and easily applied. There are no

extra or hidden costs involved in implementing the policy,to either theapplicant or the

Council.

5. Applicability

The Engineering Service Contribution will be uniformly applied based on this policy and the

formula described below. The Contribution applies whenever a land use change is granted,

regardless of the legislation or method used by the applicant to apply for the change.

6. Determination of the Contribution

6.1. In determining the contribution for roads, the following formula is used:

ESC roads = (new – existing) Trips * Distance / Lane Capacity * Cost of a lane.

Added to this is a contribution towards the strength component if the road must be

strengthened due to heavy vehicles generated by the development; plus a proportion of the

cost if a boundary road (i.e. an access street (Class 4 and 5) which is not an internal street)

is to be provided on the boundary of thedevelopment.

6.2. In applying the formula, the following is relevant:

6.2.1. Trips: The number of trips is determined by multiplying the proposed development

size and type by the trip generation rate, less any existing land use rights on the site,

multiplied by that trip generation rate. The trip generation rates are based on Average

Annual Daily Traffic converted back to an equivalent hourly rate to account for the total

impact on the road network and not merely the impact during peak hours. The trip

generation rates are provided in TMH17 South African Trip Data Manual, September 2012

(a copy of which is attached to the Implementation Manual). These are the latest and most

accurate trip generation rates available. This policy is based on these national rates, which

have been adjusted to local circumstances as provided for in the policy. The City will review

these rates from time to time.

6.2.2.Distance is the distance travelled on City of Johannesburg owned mobility roads

(Class 1, 2 and 3). The distance excludes travel on access streets (Class 4 and 5) as these

streets are provided as internal streets at no cost to the City. The distance also excludes

national and provincial roads, as these are provided by other authorities at no cost to the

City. The distance on mobility roads is divided by two to account for the fact that the origin of

the trip will pay for half the trip and the destination for the other half.The distance is provided

in TMH17 South African Trip Data Manual, September 2012.

6.2.3.Lane capacity is the service flow rate (veh/hr/lane). This figure is provided in TMH17

South African Trip Data Manual, September 2012.

6.2.4. Cost per lane is the cost of providing the land and constructing one lane kilometre of

City of Johannesburg mobility arterial road. The cost is comprehensive providing for all the

road services defined in 2.5 above. Again these figures are provided in TMH17 South

African Trip Data Manual, September 2012.

7. Applyingthe Engineering Services Contribution

7.1. The municipality is responsible for providing a master plan to applicants indicating

the development framework and the arterial road network required to serve the region or

area. If the municipality is not able to provide a master plan for the area, the applicant

can offer to pay for the master plan and any modelling required. This master plan is to

be prepared under the direction and to the satisfaction of the municipality;

7.2. The following process must be followed by applicants:

7.2.1. As part of the application, the applicant must indicate all new roads and road

upgradings required,whether they comply with the master plan for the area,which

roads are internal, boundary or external and the road authority (municipal,

provincial, national or private), to the satisfaction of the municipality;

7.2.2. The applicant will be given the opportunity to provide the external and boundary

road upgradings indicated at his/her cost that fall within City of Joburg’s

responsibility. Improvements on bordering municipal, provincial or national

roads, should be agreed by those authorities. This cost can include land,

professional fees, and doing the construction itself;

7.2.3. The City can, in its sole discretion, accept the offer(s) above and agree to offset

the costs incurred by the developer on external services against the ESC. The

costs offset must be proven actual costs incurred by the applicant.

7.2.4. In the event that the applicant offers to construct services on roads not owned by

the City of Johannesburg but owned by bordering municipal, provincial or national

road authorities and the City of Johannesburg is in favour of such construction

because it is in the interests of the community, then there must be an agreement

with the relevant authority in terms of inter-governmental co-operation legislation

and may grant the applicant a rebate on the contribution required up to the value

of the construction undertaken, but not exceeding the Engineering Service

Contributions for Roads and Stormwater;

7.2.5. The City will favour applications by the developer to provide the required

“external” infrastructure and will not unreasonably withhold permission.

In the event that the City agrees to the developer providing the infrastructure (and master

plan if applicable), one of two events can occur:

i. If the cost to the applicant is less than the ESC, the balance of the ESC must be paid

to the City of Johannesburg;

ii. If the cost to the applicant equals or exceeds the ESC, the applicant can decide:

a) to absorb the cost in the interests of the development;

b) to only provide infrastructure to the value of the ESC, in which case the

City may have to refuse the application if it is to the detriment of existing

developments;

The agreement will be recorded in the Engineering Services Agreement.

8. Utilizing the Engineering Services Contribution (ESC)

The ESC for roads and stormwater will be used for providing roads and stormwater

infrastructure as defined in this policy and not for any other purpose. Contributions paid to

the Municipality will be transferred into JRA’s Road and Stormwater Contribution Account

which has been established for this purpose.

The ESC will be used where the need is greatest, considering:

1) The cost to the applicant for undertaking the master plan on behalf of the

Municipality, if applicable;

2) The cost of land provided by the applicant for external roads and stormwater;

3) The cost to the applicant of increasing the size of internal roads and stormwater to

serve other developments at the behest of the municipality;

4) The cost to the applicant of providing external services.

Funds in the Contribution Account will be utilized in the impacted area of the development,

considering:

1) contributions received for specific roads, such as boundary roads;

2) the costs of increasing the size of internal services where the Municipality has

instructed the applicant to do so;

3) the cost over and above the ESC spent by the applicant on external roads where an

Engineering Services Agreement has made provision for this amount to roll over into

another associated development ;

9. Annual Updating

The tariff increase will be updated annually, using the consumer price and civil engineering

indices published by Stats SA. In addition, the formula and parameter file data should be

reviewed periodically and amended if conditions have changed.

Annexure B

Public Participation Process and Responses

1. Public Participation Process

On 2011/07/21, the Mayoral Committee recommended as follows:

1. That the methodology for a uniform external engineering service contribution for

municipal roads and stormwater throughout the City be approved for public comment.

2. That the proposed new method of calculating external engineering service

contributions for municipal roads and stormwater drainage be advertised for 30 days for

public comment.

3. That the Executive Director: Transportation be delegated to undertake a public

participation and other matters to ensure the timeous implementation of the new method of

calculation of external engineering services contributions for municipal roads and storm

water.

A chronological record of events and formal responses received is as follows:

2011 August 2008 ESC policy was submitted to various interested and affected parties,

including all relevant City of Johannesburg Departments for comment

2011/09/05 Comment from Les Oakenfull of Osborne, Oakenfull & Meekel

2011/09/08 Public meeting advertised in national newspapers

2011/09/08 Comment from Christo van As (project leader, national ESC Manual)

2011/09/22 Presentation to the public, A-level Lecture Theatre, Metropolitan Centre

2011/09/27 Comment from Walter Maphutsi Melato, Acting Executive Director: Housing,

City of Joburg

2011/10/05 Comment from RA Hallett, DH civil consulting

2011/10/06 Response from Gauteng Department of Roads and Transport (Tobie Roux)

2011/10/06 Comment from Rand Leases (Oliver Jones)

2011/10/06 Comment from Heartland Properties (Pty) Ltd (Charl van Niekerk)

2011/10/10 Comment from SAPOA (Neil Gopal, South African Property Owners

Association) attaching their further comment prepared by WSP Civil and

Structural Engineers (Francois van Rensburg)

2. Comments Received and Changes Made

The public comments received, many of which are similar, are grouped and summarized

below. The response and changes made follow in italics.

Comment: The policy should not be applied to applications in circulation.

Response: The starting date of the policy will be advertised and due notice given. It will

not be applied in retrospect.

Change: No change.

Comment: The Town Planning and Townships Ordinance 1986 has not been repealed.

Change: Reference to Ordinance being repealed has been removed.

Comment: The Council may not levy a contribution for provincial or national roads.

Response: This is correct. The principle of a levy for national and provincial roads was

supported by the Province and many other parties, but it is not legal for the

Council to levy an ESC on roads they do not provide.

Change: The contribution calculation has been amended to not include Provincial and

National roads.

Comment: The policy should make reference to and be in line with the national

document. It should also take account of the National Treasury policy

investigation.

Response: At the time the Johannesburg policy was written, November 2008, the

national policy was not available. Earlier drafts of the national document have

been available unofficially since 2009 and in September 2012 the “final draft”

was circulated, but it is still not official as it has not been approved by COTO.

National Treasury have not issued a policy either.

Change: The 2008 Johannesburg Policy was not significantly different from the new

national policy manual; hence no major changes have been made other than

excluding national and provincial roads. The new 2013 City of Johannesburg

Policy is now fully compliant in all respects with the national manual. Some of

the figures and values have been amended for local Johannesburg

conditions, but this isin line with the recommendations of the national manual.

Comment: The policy is silent on the contribution due if the Local Authority is the

developer.

Response: A Local Authority development has the same impact and is treated in the

same way as any other development hence must make the same contribution

to the Engineering Services Fund.

Change: No change is made to the policy but the wording clarifies the local authority is

to be treated in the same way as other developers.

Comment: The land use classifications used for ESC do not tie up with the Town

Planning Schemes’ classifications.

Response: This is true. The classification used for trip generation purposes is generic,

and may not always be the same as the Town Planning classifications. It is

however always possible to relate the two classification systems. Due to the

large number of different Town Planning classifications nationally, it was

decided to retain the trip generation classification, particularly as the traffic

studies were done in compliance with the land use categories.

Change: No change.

Comment: Provision should be made for development specific ESC calculations, e.g. for

mixed use developments.

Response: Agreed.

Change: The applicant and the City must agree on the extent of mixed use

development, on the income level of the development and on the ready

availability of public transport. There is also provision for different rates in

different regions. Once agreed these are input into the spreadsheet and

standard reductions, where applicable, are automatically calculated by the

program.

Comment: The classification of “external” roads is unclear.

Response: External roads will be shown on the Masterplan. Any land or increase in

service provision over and above the minimum standard required by the

development is also external. There should therefore be no confusion.

Change: The new policy defines external and internal services.

Comment: The Venter Commission required developers to provide land for internal roads

at a maximum of 20.0m wide and roads at a maximum 7.4m wide free of

charge. The new policy states it must to a standard acceptable to the local

authority without referring to maximums. Full cost recovery is therefore

potentially unfair.

Response: The new policy states that “internal” services are those provided for the

“exclusive” use of the development and are the responsibility of the

developer, even if, as is normal, they are handed over to the municipality free

of charge when the development is completed. Internal services to be taken

over by the municipality must be provided to municipal standards but any

requirement to provide land or services over and above the minimum

standard required for the development is considered external. The policy

does not require any services over and above those required for the

development and is therefore fair.

Change: No change.

Comment: The principle of developers constructing roads in lieu of paying contributions

is supported but there is a concern over the legality of this if the roads thus

improved do not appear on the Council’s budget. Furthermore National

Treasury limits the amount by which the Council’s budget can grow. These

roads are not likely to be on the Council’s budget, so can the Council approve

their construction?

Response: This is a valid concern not addressed in the 2008 policy.

Change: The City of Johannesburg has resolved to allow Applicants to provide land

(for road reserves) and install external services in lieu of monetary

contributions. This allowance is necessary to avoid unnecessary delay in land

development due to the City of Johannesburg not being in a position to

procure the services in time for development to occur.This allowance is

treated as an exceptional case for which provision is made in the Supply

Chain Management Policy of the Municipality in terms of the Regulation 36

(1) (a) (v) of the Municipal Supply Chain Management Regulations (General

Notice 868 of the Government Gazette No 27636 of 30 May 2005).”

Comment: There is a concern that the City may not implement the “ring fencing” of funds

paid by the private sector for roads.

Response: The policy contains the following statement: “The ESC for roads and

stormwater will be used for providing roads and stormwater and not for any

other purpose.” By adopting the policy, the City of Johannesburg is

committing itself to uphold this principle. Any contributions paid by the

developer to the City of Johannesburg for roads and stormwater are

transferred to the Johannesburg Road Agency’s Engineering Service

Contribution Account, which is a ring-fenced account that can only be used

for the purposes intended.

Change: No change.

Comment: Reference is made to documents such as National Guidelines for Road

Access Management in South Africa (RAM) which has not been subject to

public scrutiny, has possibly not been formally adopted by the City and is not

readily available to the private sector.

Response: Reference is not made to the “RAM” document in the new policy, but

reference is made to other documents such as the South African

Engineering Service Contribution Manual for Municipal Road

Infrastructure, COTO, TMH15, September 2012 as well as the data manual

of the same date to which the same comments might apply.

Change: The South African policy is being circulated nationally and should be available

soon. The City of Johannesburg policy, while being in line with the national

policy, is not dependent on it being approved. The national data manual is

built into the City’s spreadsheet calculations and will be made available to

applicants.

Comment: There is confusion about the policy for boundary roads and link services.

Change: Reference to link services has been removed and the policy with regards

boundary roads clarified.

Comment: The policy gives the municipality the right to unilaterally adjust any of the

values on an ad hoc basis. This is one-sided and unfair.

Response: The values used in the formula are extracted from the national data manual.

Applicants can comment or object to these values and if valid, amendments

to the values can be made by the City. If changes are made, these will be

applied consistently to all developments from then on. The value of land and

construction costs will be advertised by the City annually along with its other

tariff increases, or more frequently if necessary, and there is a process to deal

with public objections.

Change: No change.

Comment: The policy attempts to shift the responsibility for providing a masterplan to the

private sector by allowing an ESC rebate, but the applicant has no recourse if

the plan is rejected by the municipality and must bear the cost.

Response: The policy makes it clear that if the municipality cannot provide a masterplan

the applicant can offer to have the plan prepared “under the direction of the

municipality”. There is no danger therefore that the plan will be rejected by the

municipality as it will be the municipality’s plan. The applicant will therefore be

entitled to claim for the cost of plan preparation from the ESC.

Change: No change.

Comment: The policy redefines the purpose of a Traffic Impact Assessment but does not

provide a replacement.

Change: The new policy delinks the Traffic Impact Assessment from the ESC

determination and removes the reference to a TIA.

Comment: The principle of implementing services in lieu of making an ESC contribution

is supported but should not be enforced upon the applicant. If the applicant

chooses not to provide external services, this should not be a reason to reject

the application. If the applicant does choose to provide the services the

completion of the construction should not delay the approval of the

application.

Response: It is not the intention of the policy to force the applicant to provide external

services or delay the application if it is the applicant chooses not to provide

the services. The application will be treated on its merits regardless of

whether services are provided or not.

Change: No change.

Comment: The policy on stormwater appears to be an afterthought and is not properly

addressed.

Response: The policy on stormwater follows exactly the same principles as the policy on

roads. Where it is not specifically addressed, the roads principles will apply.

Change: No change.

Comment: Insufficient time and opportunity has been afforded the public to comment.

The policy will have a significant impact on development costs and should be

advertised much wider. The spreadsheet to calculate the ESC amount was

not provided for comment.

Response: Opportunity to comment was provided in terms of standard City of

Johannesburg procedures. Further comments will be considered at any time,

even after approval by the City

Annexure C

Parameters for the Calculation of Engineering Service Contributions for Roads and

Stormwater.